Cutting Corruption by Raising Government Salaries?

Corruption is a common barrier to development—it deters governments and individuals from investing in certain types of aid assistance and development projects. Instead of allowing funds to flow safely and efficiently between groups, corruption adds overhead costs to projects and usually demands bribes for bypassing bureaucratic red tape. Worst of all, people suffer when their governments incessantly block aid and reap the benefits themselves. This is also why some development theorists maintain that government and institutions need to be reformed in order to actually achieve development goals.

But what if there was a simple solution for all of this? What if there was a way to ensure that the government was not corrupt, and would facilitate growth and foreign investments?

Lee Hsien Loong, Prime Minister of Singapore | Source: Jakarta Globe

A recent article in The Economist describes Singapore’s government salaries—higher than most—as attempts to ward off potential corruption. However, these salaries have received backlash, mostly from Singaporeans unable to handle rising prices and who do not believe such high salaries are necessary to prevent corruption. As a result, the salaries of government officials are being cut by up to 51 percent.

In Singapore, the reasoning for higher salaries goes slightly beyond an anti-corruption measure: it is meant to serve as a draw for individuals in the private sector, and as a competitive salary as well. However, the new reform ties government officials’ salaries to the well-being of Singaporeans themselves and is based on meeting specific socioeconomic targets. Using a new mathematical formula that draws from 1,000 people’s salaries instead of 48 to get a more accurate median, government officials have even more of an incentive to stay clean and promote Singaporean growth.

Furthermore, the problem with Singapore’s model is that while successful, it is not scalable in developing countries just yet. Singapore’s efficient government aims to maximize the country’s output and growth, while attempting to stem the flow of brain drain abroad and to the private sector. Unfortunately, some developing countries suffer from significant brain drain and are unable to lure those people back. Intended to attract private sector workers to work for the government, Singapore’s system is efficient partly because even using an adjusted salary calculation leaves their government officials far wealthier than most. While using the same formula may still provide leaders in developing countries with salaries higher than the average citizen, it may not be enough to deter the potential profits from corruption.

Ratio of Political Leaders' Pay to GDP per person | Source: The Economist

This predicament poses two interesting questions for developing countries: (1) would raising government salaries deter corruption? or, (2) would it encourage corruption because higher salaries could be more easily directed for personal gain? In addition, developing countries would then need the ability to fund higher government salaries and create a functioning judicial/legislative system that could uphold the anti-corruption practices intended as a result.

The dilemma remains that there is no sure-fire way to get rid of corruption. Rather, there are various alternatives that can deter corruption from dominating politics and impede the welfare of people in developing countries. Until they have the resources to raise government salaries or take a hard(er) crack at corruption, developing countries will just have to wait and see if the reverse occurs in Singapore and corruption rises as salaries decrease.

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